Leading staffing firm Robert Half International Inc. (RHI - Analyst Report) reported first quarter 2013 earnings of 40 cents, ahead of the prior-year quarter earnings of 34 cents per share by 17.6%. Earnings however lagged the Zacks Consensus Estimate by a penny.
Despite sluggish performance in the international markets, Robert Half witnessed strong earnings growth driven by solid demand for skilled professionals in the U.S., particularly in permanent placement, information technology staffing and in Protiviti operations. In fact, the company’s earnings have now grown more than 15% year over year for 12 straight quarters driven by growing demand for skilled workforce and consulting services.
We believe that the demand for the company’s services, in particular its staffing services, is highly dependent on the state of the economy and the staffing needs of the company’s clients. A gradual improvement in economic conditions and in job markets in the U.S. has led to a rise in the demand for the company’s specialized staffing and consulting services.
Quarter in Detail
Robert Half's total revenue remained flat year over year at $1.02 billion but missed the Zacks Consensus Estimate of $1.05 billion. On a constant currency basis, revenues increased 4% year over year on the back of rising global staffing revenues. While revenues in the U.S. grew 6% in the first quarter, international staffing revenues declined 9% on a constant currency basis.
Gross profit was $410.3 million in the reported quarter, up 2.0% year over year. Gross margin expanded 50 basis points to 40.1% in the first quarter as against 39.6% in the prior-year quarter. Operating income increased 11.8% to $89.5 million in the quarter. Operating margin increased 80 basis points to 8.7% in the first quarter of 2013 on the back of higher gross margins, lower operating expenses and solid Protiviti results.
Revenues at Accountemps declined 2.3% while revenues at Robert Half Management Resources decreased 3.1%. Revenues increased 0.6% both at Office Team and at Robert Half Finance and Accounting. Revenues grew 4.6% at Robert Half Technology, while revenues at the Protiviti division jumped 13.6% from the prior-year quarter.
Robert Half had cash and cash equivalents of $22.4 million at the end of first quarter 2013 versus $287.6 million at the end of fourth quarter. Capital expenditure was $8 million as against $14.0 million in the fourth quarter of 2012.
Robert Half paid its stockholders a cash dividend of 16 cents per share on Mar 15 at a total cost of $22 million. The quarterly dividend was raised from 15 cents in February.
The company also repurchased 0.8 million shares for a total of $30 million during the quarter. There are approximately 10.6 million shares remaining under the board approved stock repurchase plan.
Robert Half carries a Zacks Rank #3 (Hold). Other stocks in the business services sector include Trueblue Inc (TBI - Snapshot Report), Manpower, Inc. (MAN - Analyst Report) and Amn Healthcare Services Inc (AHS - Snapshot Report). While Trueblue holds a Zacks Rank #1 (Strong Buy), Manpower and Amn Healthcare both carry a Zacks Rank #2 (Buy).